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5 easy ways to attract an investor by Daniel Waterhouse of Balderton Capital

attract an investor attract an investor

Business founders regularly cite securing investment as one of the key challenges. Here are 5 tips from Daniel Waterhouse, an investor with 14 years experience to help you out.

Business founders regularly highlight securing investment as one of their biggest challenges. But that should come in second to the challenge of how to attract an investor’s attention in the first place. Most startup founders are first-time entrepreneurs. This means that mistakes are inevitable. Due to my experience as an investor, currently at Balderton Capital, I understand that. So here is some advice that will help you attract an investor’s attention.

1. Get to the point

You have one shot to attract an investor initially.

Make sure you really nail your story so that it is very fluent and precise.

It’s important to get to the point. Quickly.

Avoid coming in and spending the first 25 minutes talking about your childhood or the market.

It is great context for investors to learn about the people behind a company but keep things punchy!

In the first 10 minutes of a pitch, an entrepreneur needs to say why they and their team can change whatever world they’re going to change.

What is it about their motivation, their background and their DNA that’s fused together to create this amazing team.

You will need to answer questions to include:

  • Why is it important to do what you’re doing?
  • How are you going to change the lives of your users?
  • Why will that create a big business?
  • What have you already achieved?

In order to attract an investor, the first 5 slides of your pitch should be: team, concept, opportunity, momentum, progress.

Then get into a product demo.

2. Get the basics right

Make sure you are ready to start the meeting promptly.

I see entrepreneurs who come in without having the presentation ready, so they spend 5 minutes setting up the laptop and finding the file. It’s just a bad way to start the meeting and will make it harder to attract an investor’s attention.

You need to get investors to fall in love before asking them to propose.

You should get there early and be ready so you can maximize your time with the investor.

3. Know your audience

You need to understand the background of the people you are talking to and what they are focused on.

Make sure you have researched each individual investor you meet, not just the firm they work for.

4. Follow up effectively

Keeping a record of all interactions and then making sure to follow up after each meeting is also a good way to attract an investor’s attention.

Stay on top of all communication with investors and don’t drop the ball at this stage.

It’s important to show that you are really in control of your business and how you run it.

You should then push for quick follow on meetings with those investors that show interest initially, respond rapidly to diligence requests and keep feeding them news on business progress.

You need to get investors to fall in love before asking them to propose.

That means getting them hooked on the team, the vision, the progress so far.

That needs to happen before you start talking about valuation and deal terms.

5. Question your potential investors

Having said that, you need to understand that after you attract an investor’s attention, your relationship with your investors will be a long term one.

You need to do diligence on them and understand how they work.

That means asking them questions – it’s shouldn’t all be one way.

The type of questions you should be asking are as follows:

  • How do you work with the companies you invest in?
  • Who should I speak to at other companies to find out what it was like working with you?
  • How long do you typically invest for?
  • Are you looking to sell the business after a year or are you in it for the long run?
  • What do you think the role of a board is?
  • Can you give an example of what happened when one of your companies was going through a tough time?